forex-scalping.com

Brokers execute orders in different ways, and the model affects costs, fills and whether the broker profits when you lose.

• ECN/STP: orders are passed to liquidity providers. Spreads are variable and very low, with a commission per lot. The broker earns mainly from commission.
• Market maker: the broker takes the other side of client trades. Spreads are often fixed or wider, usually without commission. The broker earns from the spread and may profit from client losses.
• Hybrid: many brokers internalise some flow and pass on the rest, depending on size and client profile.

For scalpers, what matters most:

• Total cost per trade.
• Slippage behaviour, particularly whether it is symmetric.
• Policies on short holding times.

The label "ECN" is used loosely in marketing, so measuring execution yourself is more reliable than trusting the description.

Which model does your broker use, and how did you verify it?

The label told me nothing until I logged fills on two accounts side by side. Each got the same 300 EURUSD market orders over a month, mirrored from one EA, and I recorded the quoted price at send against the fill.

The account sold as ECN had 41 orders slip against me and 38 in my favour, mostly by 0.1 or 0.2 pips. The other, a fixed spread account, had 61 against and only 4 in my favour, with a few as large as 0.6 pips.
The chart shows both distributions, and the shape matters more than the average. Symmetric slippage is the cost of a real market, while a lopsided one means the good side of the move is being kept by someone else.

Total cost still favoured the commission account for me. A 0.1 pip spread plus 0.7 pips of commission came to 0.8 against 1.2 fixed, before slippage widened the gap.

Hold time rules are worth reading in the client agreement itself. One account I looked at reserved the right to cancel profits on trades closed within two minutes, which ends the discussion for a scalper.

Did anyone get a straight answer from support about internalisation? Mine only repeated the marketing page.